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TMI Blog2025 (1) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... s to take recourse to any other principles of interpretation. In our opinion, no two views are possible on this point. Further, the law is well settled that except in matters of procedure, there is a presumption that law operates prospectively unless there is compelling evidence to the contrary, being, inter alia, any express statement to that effect - The intent of the Notification of 2011 is a change in the legislative policy on to whom such exemption must be granted. This change in policy cannot be lightly held to be retrospective, particularly where there are no express words in the Notification that make it retrospective. The question of whether an exemption granted operates retrospectively or prospectively is not one which requires us to choose between a liberal and a strict construction; the plain language of the Notification is perfectly clear and there is no ambiguity at all - there are no infirmity in the impugned order. Whether the Commissioner is right in finding that the Appellant ought to have resorted to the provisions of rule 6(7B) of the Service Tax Rules, 1994 and paid service tax at the rate of 0.25% on the gross amount of currency exchanged? - HELD THAT:- Even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be taxable. Conclusion - i) The intent of the Notification of 2011 is a change in the legislative policy on to whom such exemption must be granted. This change in policy cannot be lightly held to be retrospective. ii) The option under Rule 6(7B) is an option available to the assessee and not to the Revenue. iii) There is no flow of consideration in terms of money on these transactions since there is no conversion as such and hence, the same would not be taxable. Appeal stands partly allowed. - MR. P. DINESHA, MEMBER (JUDICIAL) AND MR. M. AJIT KUMAR, MEMBER (TECHNICAL) Ms. Radhika Chandrasekar, Advocate for the Appellant Shri Sanjay Kakkar, Authorized Representative for the Respondent ORDER The Appellant is an authorized dealer in foreign exchange approved by the Reserve Bank of India and registered under the service tax laws under the category Banking and other Financial Services . It is licensed to sell and purchase foreign currency, travellers cheques, travellers cards, etc., which services fall Sections 65(105)(zm) and 65(105)(zzk) of the Finance Act, 1994. The tax periods under consideration in this Appeal are from 01.04.2008 to 31.03.2012. 2. During these periods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged by the Appellant. It is his finding that the exchange rates at which the Appellant exchanged currency are at variance with the actual exchange rates prevailing in the market at the relevant times and that this difference between the actual prevailing market rate and the exchange rate adopted by the Appellant represented the true consideration for the transactions undertaken by the Appellant. The Commissioner thus finds that the Appellant earned additional amounts by unilaterally fixing the exchange rates for the currencies dealt with. The Commissioner therefore finds that though the service charges of Rs.25/-- fixed by the Appellant suffered service tax, the additional amount earned by the Appellant by way of fixing foreign exchange rates did not suffer service tax. On this issue, the Commissioner confirmed a differential demand of Rs. 4,81,75,444/--. 6. The Appellant is also a stockist of foreign currency denominated travellers cheques and prepaid cards. The Appellant sells such cheques and cards to travellers by fixing a price for each foreign currency, buying the relevant foreign currency from authorized dealers and then giving the same to the issuer whose product, i.e., the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided or to be provided, - (zm) to any person, by a banking company or a financial institution including a non-banking financial company, or any other body corporate or commercial concern, in relation to banking and other financial services; . .. (zzk) to any person, by a foreign exchange broker, including an authorised dealer in foreign exchange or an authorised money changer, other than a banking company or a financial institution including a non--banking financial company or any other body corporate or commercial concern referred to in sub--clause (zm); 10. The Notification No.19/2009 dated 07.07.2009 and the Notification No.27/2001--ST dt. 31.03.2011 are reproduced below for the ease of reference. Foreign Currency Sale and purchase of, exempted from Service tax for inter-bank transactions In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service, referred to in sub-clause (zm) or (zzk), as the case may be, of clause (105) of section 65 of the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such transactions are carried out by money changer. Reliance is placed on the following case law : (i) Gottumukkala Venkata Krishnamraju Vs Union of India in W.P. (Civil) No.732 of 2018 -- *(2019) SCC 590+ (ii) Government of India Vs Indian Tobacco Association in Civil Appeal No.5196 of 2005 -- *2005+ 7 SCC 396 (iii) Union of India v. Steel Authority of India Ltd. 2013 (297) ELT 166 (Chhattisgarh) (iv) W.P.I.L Ltd v. CCE Meerut 2005 (181) ELT 359 (SC) (v) Sujana Metal Products Ltd. Vs CCE Hyderabad -- 2011 (273) ELT 112 (Tri.Bang.) (vi) Belapur Sugar Allied Indus. Ltd. Vs CCE Aurangabad -- 1999 (108) ELT 9 (SC) 13. Per contra, it is contended by Sri Sanjay Kakkar, ld. Deputy Commissioner appearing for the Respondent--Commissioner that as the Notification of 2011 clearly states that the same comes into force with effect from 01.04.2011, it could only be prospective in its operation. 14. Having heard the rival contentions, we find that the effect of the Notification of 2011 was to expand the scope of the exemption. Whereas until the Notification of 2011, the exemption was available only to services rendered to a scheduled bank by a scheduled bank, the extent and classes of service p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese reasons, on this issue (a), we do not find any infirmity in the impugned order and hence, we uphold the findings of the Commissioner to this extent and dismiss the relevant grounds urged by the Appellant. 17. We shall now consider Issue (b). On this issue, it is the contention of the Appellant that it has charged only Rs.25/-- per transaction and that it has discharged applicable service tax due on their own. It is their case that Rule 6(7B) of the Service Tax Rules, 1994 confers an option on the Appellant to discharge service tax in the manner provided for therein. The Appellant relies on the proviso to that Rule to contend that the option will not be available in cases where the consideration for the services provided is shown separately in the invoice issued by the service provider. Reliance is placed on Circular No. 334/1/2008--TRU dated 29.02.2008 in this regard. The Appellant also contends that since it has identified the transaction value in its invoices and discharged service tax thereon, considering that the option being available to the Appellant, the Revenue cannot force the Appellant to exercise or not to exercise that option. 18. The Appellant places reliance on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dollar. At paragraph 4.9, the Commissioner finds that the exchange rate available on that date was Rs.45.06. There is also a finding that an additional amount of Rs.1078/--, which was the hidden consideration, had escaped the levy of service tax. 20. Having heard learned counsel for the parties, we find that the specific finding concerning particular transactions which have been recorded in the impugned order may possibly reveal some hidden consideration. However, even if the factual findings of the Commissioner on this point are accurate, such findings are limited to a small number of transactions of the appellant. We find that the revenue has been unable to sufficiently disprove the possibility that this variance could be otherwise justified. In any event, the occurrence of such variance is in a small number of transactions which could be on account of myriad reasons occasioned by particular circumstances. There appears to be nothing forthcoming from the Appellant s submissions to explain the reasons for these differences. 21. Nevertheless, considering that only a very small number of such instances have been pointed out by the Revenue, in our opinion, the evidence on the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the demand in this regard is raised considering all the proceeds shown in the balance sheet, which is incorrect. 25. Per contra, it is the case of the Revenue that the appellant is only trying to justify the non--levy of service tax for corporate customers who maintain EEFC accounts by stating that the foreign currency provided by the appellant to such customers is returned by them from the same accounts thereby making it a neutral transaction where it is claimed that no currency conversion is involved. This may be true in so far as the transaction is concerned, but the same cannot be accepted from the service tax perspective since service element is involved in each transaction. Transaction of providing foreign currency and the transaction of repayment of proceeds are separate transactions happening at two distinct points of time and hence, the liability has been correctly fastened on the appellant. We find that there is no flow of consideration in terms of money on these transactions since there is no conversion as such and hence, the same would not be taxable. Hence, we agree with the contentions of the Ld. Advocate and hold that the demand in this regard cannot sustain. 26. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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